#Shockingly simple math retirement how to#

The reason being that you will be looking to use your money within the next two years. The bank is still the better place for your hard saved cash, despite the non-existent interest rates. Or is a savings account (even with the very low interest) the best plan? But I do wonder if there's something else I could do with it in the short term. Because I want to use it in the short term, I don't plan to invest. I plan to add to it further for another year or so to use as a house deposit. I have around $25,000 sitting in a savings account.

The Millennial Personal Savings Rate is in.Where is the best place to be holding my house deposit savings, considering the bankвЂ™s interest rates right now are next to nothing? IвЂ™m not wanting to buy this year but maybe in the next two yearsвЂ¦.

Want to take things a step further? You should also calculate and monitor your personal inflation rate to help monitor and prevent lifestyle creep! What is your Personal Savings Rate? Once you have the numbers, itвЂ™s much easier than it looks. It may help to pull out your most recent paycheck to complete the calculation.

Step 3: divide net savings by total income to get personal savings rate: Personal savings rate = $10,000/$46,000 = 0.21 = 21%.

Note that the IRA contributions and non-retirement savings are not added because they come out of take home income (no need to count twice).

Step 2: calculate total income: $6,000 (401K contributions) + $40,000 (take-home income).

My after tax (take-home) income is $40,000. I have an additional $2,000 saved outside of retirement accounts. LetвЂ™s hypothetically assume that I save $5,000 in my 401K and $2,000 in an IRA. Personal Savings Rate = Step 1 (all savings or debt) / Step 2 (all income) Add your total take home income (after tax income) to your employer retirement savings. This number could end up being negative as well, if you had net debt for the time period, instead of savings. Capital gains or losses should not be factored in вЂ“ just the contributions. This includes non-retirement savings and your retirement savings for the year (all personal retirement contributions + all employer retirement contributions).

Step 1: Add up net savings (or losses).

In order to calculate your personal savings rate:

#Shockingly simple math retirement how to#

Want to calculate your own personal savings rate? Why wouldnвЂ™t you? HereвЂ™s how to do itвЂ¦ How to Calculate your Personal Savings Rate: And suddenly, that 5-7% personal savings rate number looks pretty paltry, doesnвЂ™t it? The BEA does factor in employee and employer retirement contributions to 401Ks and IRAs into their personal savings rate calculation. Although much easier to calculate, and in some ways more relevant if youвЂ™re looking for a barometer on early retirement, this calculation is not what the government uses. They claim that personal savings is basically calculated by taking non-retirement savings and dividing by take home income.

There are a lot of incorrect sources on the web that claim retirement savings in 401Ks and IRAs are not included in the government personal savings rate calculation.